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The most frequent question posed on the ASU Lodestar Center's "Ask the Nonprofit Specialists" service is about how to start a nonprofit organization. Recent research by Civic Ventures suggests that there is strong interest and intention among "boomers" (individuals in their 40s, 50s, and 60s) to create jobs for themselves and others as entrepreneurs, making a positive social impact. More than 12 million aspiring entrepreneurs want to be "encore entrepreneurs," by starting a nonprofit or socially oriented business. There is also a growing trend of new nonprofits run by college students. According to Crain's New York Business, "The flood of 'postmillennials' creating their own nonprofits stems from two trends, experts say: a generational desire to do something meaningful and the quest for individualism."
"In a sea of bad economic news, it's heartening that millions of people with experience want to take matters in their own hands and launch their own ventures to meet social needs in their communities," said Marc Freedman, founder and CEO of Civic Ventures.
Mark Rosenman, in a blog post titled, "Calling All Boomers: Don't Start More Nonprofits," disagrees with the idea of creating new nonprofits, instead suggesting that "baby boomers shift their social commitment from an ill-advised and self-centered ambition to start a plethora of new enterprises and instead work together, and with others, to build the social, political and economic movement required today."
Currently, there are over a million nonprofit organizations, and in this climate of funding scarcity, the controversy of whether or not there are already too many nonprofits continues to rage, and nonprofit entrepreneurs are both encouraged and discouraged from pursuing their ventures.
As the founder of two nonprofits and the first executive director of two others, I am a firm believer in the power of social entrepreneurism, so my perspective on the issue of "to start or not to start" may be a bit biased. Social entrepreneurism is at the root or every successful nonprofit organization, and the motivation to be of service and create positive change is admirable. That being said, it is important to consider a few factors if you are considering starting a nonprofit organization:
Is there a need?
Some of my most brilliant ideas for programs have already been the brilliant ideas of someone else in other organizations that are already addressing the issue. Some other great ideas were not really so great when I researched the need, or more accurately the lack thereof. If the need is already being addressed by another organization, your best bet may be to join forces with this organization.
It's all about the mission!
I'll admit it – I needed a job when I started my first organization. Fortunately for me the mission and need were both compelling, so my desire to create a job lined up well. The mission of a nonprofit is, by design, bigger than any one person and his/her desire to make a personal contribution or create a job. Anyone considering starting a nonprofit organization should build plans from the onset for how the organization will continue beyond the founder's participation.
Getting your 501(c)(3) status will not launch your organization by itself
In my brief tenure at the Lodestar Center (two months!), I have already encountered several individuals who are under the impression that getting their 501(c)(3) status is, by itself, all that is needed to raise funds and get started. The process of applying for 501(c)(3) status is more complex than filling out a form. It requires information developed from planning processes that are important to effective nonprofit management. Articles of Incorporation, bylaws, a budget, fundraising strategy, and succinct and clear plans for what your organization seeks to accomplish, and how you plan to go about it, are required for a 501(c)(3) application. But more importantly, they are necessary for you to effectively run your organization.
Show me the money!
Your plans to start a nonprofit organization need to include efforts and plans to raise funds to support your work. This requires building a base of support from individuals and institutions who share your passion for the mission. In the meantime, you must also demonstrate your ability to get the work done by establishing a track record of services. This may require aligning with an allied organization to get your start, which might help bring in funds before you are well established. Get started with fundraising as soon as your mission and preliminary plans are clear. If you are successful, you will have a clear indicator that your mission resonates with others.
Don't be afraid to ask for help
There are a lot of great resources out there to help you be successful. The ASU Lodestar Center has many resources related to starting and managing nonprofit organizations, including a three module workshop on starting nonprofit organizations. I am also available to answer your questions through our "Ask the Nonprofit Specialists" service. We also have great resources on our Frequently Asked Questions page, and offer extensive professional development through our Nonprofit Management Institute.
Starting a nonprofit organization is an exciting endeavor, but one that requires a compelling community need, a well-defined mission, and strategic planning. If you choose to undertake this effort, make sure you arm yourself with the proper tools and resources.
At age 23, Anne Byrne was the founding executive director of Denver’s rape crisis center, an organization that continues to flourish today, over 28 years later. Byrne went on to build a nationally recognized, multi-site summer and after school tutoring program for inner city youth. With 25 years of experience as an executive director of emerging nonprofit organizations, Byrne brings valuable expertise and perspective to the Lodestar Center's "Ask the Nonprofit Specialists."
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Click here to read Gordon Shockley's "The Functions of Government in Social Entrepreneurship"